The Automobile Association (AA) anticipates significant fuel price reductions when the department of mineral and petroleum resources makes its monthly adjustment on Wednesday, 4 September.
Due to consumer inflation hitting a three-year low, the association expects fuel prices to drop for the fourth consecutive month.
Unaudited data from the Central Energy Fund (CEF) indicates that 95 unleaded petrol (ULP95) will decrease by 94c/l, and 93 unleaded petrol by 86c/l. Diesel’s wholesale price is expected to fall by 76c/l, and illuminating paraffin by nearly R1.01c/l.
“The reason for this welcome news is the perfect combination of a strengthening rand-dollar exchange rate since the middle of August, and significantly lower international oil prices, which dipped around mid-August and increased the over-recovery on the fuel prices in the period under review,” the AA said.
If these decreases occur, the cumulative effect over the last four months will be substantial. For instance, ULP93 inland decreases would total R2.44/l, saving about R122 on a 50l petrol tank.
However, consumers should note the fuel retail margin increase starting in September. The mineral and petroleum resources minister, Gwede Mantashe, has approved a 5c/l increase to the fuel retail margin, which will slightly offset the total decrease.
“Lower fuel prices are good news for all consumers. Apart from the immediate impact of buying cheaper fuel, input costs across various sectors are not impacted by higher fuel costs. At a time when most South Africans are still struggling to make ends meet, this is welcome news for all,” the AA said.
Regarding the fuel review, the AA welcomes the news that the finance minister, Enoch Godongwana, will soon present a ‘fuel price intervention plan’ to the cabinet.
“This is a positive development and, we believe, long overdue. We have no illusions that finding ways to mitigate rising fuel costs will not be an easy undertaking, but it is important that the government initiates a process that ultimately seeks to benefit consumers. We will monitor these developments closely and we are, naturally, at the ready to assist government in any way we can in this process,” the AA said.
The rand reached a 13-month high on Friday, buoyed by optimism about South Africa’s economy and expectations of imminent Federal Reserve interest-rate cuts. The currency advanced as much as 0.8% to R17.59 per dollar, the strongest level since July 2023, and has gained 4.3% this year.
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